Managing Regional Impacts of Trade Liberalization: Informal Practices and Collaborative Economic Development on the U.S.–Mexico Border

Abstract

How can local actors manage the regional-level impacts of trade liberalization? Most scholarship focuses on how given endowments, such as geographic location and existing industries, affect the local economic impacts of these contentious policies. This study considers local actors’ room for maneuver by focusing on a controlled case comparison of two city pairs along the Texas–Mexico border. These city pairs possessed very similar resource endowments and formal institutions prior to the enactment of the North American Free Trade Agreement, but diverged dramatically afterward in their economic growth patterns. A detailed comparison of policy implementation reveals that distinct local informal institutions were a key source of their economic divergence. The identification of the role of these “repertoires” of unwritten local habits and practices underscores the potential impact of collaborative efforts on long-term economic outcomes while adding to our understanding of the basis on which such collaborations are built.